What Is Upcoding in Medical Billing?

Be Aware of this Fraudulent and Costly Practice

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Upcoding is fraudulent medical billing that costs us all money and possibly health. It refers to a practice in which a provider bills a health insurance payer (whether private, Medicaid or Medicare) using a CPT code for a more expensive service than was performed.

Upcoding is illegal. It's a fraudulent practice used by providers who are trying to cheat the system so they will be paid more money than they have negotiated with those payers. It is very costly for individual patients and for taxpayers.

Further, upcoding can have negative health ramifications for patients. It puts false information on their medical records and can affect their future ability to get insurance.

Upcoding in More Detail

Each procedure performed by a doctor or other healthcare provider has a code attached to it that allows them to bill your insurance, Medicaid or Medicare, or whoever your payer is—which may even be you, the patient. That code is called a CPT code, which stands for Current Procedural Terminology.

When your doctor sends a code to your payer, that CPT code determines how much he or she will be paid. Different codes correspond to different procedures or services and can have higher or lower costs. As long as the provider uses the correct code, then the provider is paid based on the services and procedures performed.

When a provider upcodes, however, they assign a code for a more expensive service or procedure than was performed.

Examples of Upcoding

  • Example 1: You visit your doctor for a quick check-up. The code for this visit indicates she would get paid $50. But, if the doctor assigns the CPT code for an expanded check up, she would be paid $100.
  • Example 2: Dr. Cheater diagnoses Mrs. Smith with a broken leg. Mrs. Smith's "break" is only a hairline fracture. Dr. Cheater tells her to be careful and use crutches to stay off her leg for a few weeks. However, when Dr. Cheater submits the bill to Medicare for Mrs. Smith's broken leg, he enters a CPT code indicating that he put her leg in a cast, and later he submits a bill for removing that cast—both services that pay him more than what he actually did to care for Mrs. Smith, using different codes to bill her insurance for those services. 

Upcoding Can Have Negative Effects on Your Health

Upcoding can have negative consequences for your future care and your future ability to get health insurance, depending on the code the doctor uses.

For example, suppose you have what feels like heart palpitations. Your doctor may run an EKG and discover that you have no problem with your heart. You leave, relieved. However, your doctor bills for that EKG, but also codes your visit as an appointment for a heart patient, which brings in more money. Now your medical records reflect that you may have a problem with your heart—which is not the case.

Your future treatments may then be affected because your record indicates that you are a person with a heart problem. Another doctor might prescribe a drug differently, or if you show up in an ER, they may treat you differently. You won't receive appropriate treatment because your records are wrong.

Further, say you lose your current job and you find yourself needing to get health insurance later. You currently cannot be turned down for having a pre-existing condition under the Affordable Care Act, but your insurance may now cost you more than it should.

It is important for patients to take control of our medical records by double-checking for errors.

Upcoding is Illegal and Costs Us Money

Upcoding is illegal and fraudulent. Any provider who intentionally upcodes is breaking the law.

As patients, we might think it doesn't matter to us because it's the insurer who is paying for it. However, upcoding costs all of us money, both as taxpayers and as premium payers. When a Medicare or Medicaid patient is upcoded, the costs for those public systems increases and we all pay for it through taxes.

If a private insurer receives an upcoded bill, then premiums go up for everyone who has that insurance. One upcoding provider can cost us all millions of dollars over time. 

What to Do If You Suspect Upcoding

If you check your Estimate of Benefits (EOB) and you believe your doctor is guilty of upcoding, there are some steps to take to make sure your payer has not been billed fraudulently.

  • First, contact your provider and ask about it. They can either explain to you why it is correct, or they may offer to correct it. In either case, it will put you on notice that you need to continue checking your EOB each time one arrives.
  • If you aren't satisfied with the answer, and even if they offer to correct it, you'll want to check past EOBs to see if you can identify a trend in upcoding.
  • If you suspect your provider is upcoding on a regular basis, you'll want to report it to your payer right away. If that provider has upcoded your care more than once, then he or she has done it to others, too.

If your payer is a private insurer, then call their customer service person and ask to whom you should report upcoding fraud.

If you receive Medicaid, you'll need to check with your state's Medicaid office to see how they want upcoding or other fraud reported.

If your payer is Medicare, you'll find the steps for reporting fraud, including upcoding, at the Medicare website.

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